LIBRARY 


UNIVERSITY  OF  CALIFORNIA. 


Class 


The 
Cost  of  Growing  Timber 


BY 


R.  S.  KELLOGG 


AND 


E.  A.  ZIEGLER. 


1911. 
AMERICAN    LUMBERMAN. 

Chicago. 


LIBRARY 

OF  THE 

UNIVERSITY  OF  CALIFORNIA. 


Class 


The  | 

Cost  of  Growing  Timber 


BY 


R.  S.  KELLOGG, 
Secretary  Northern  Hemlock  and  Hardwood  Manufacturers  Association, 

AND 

E.  A.  ZIEGLER, 

Director  Pennsylvania  State  Forest  Academy. 


1911. 

AMERICAN  LUMBERMAN. 
CHICAGO. 


CONTENTS 

Introduction 4 

Elements  of  Cost 5 

Land  Value  and  Stocking 5 

Administration  and  Protection 5 

Taxes  .- 6 

Rate  of  Interest 7 

The  Yield  7 

Present  Stumpage  Prices 8 

White   Pine 8 

Loblolly  Pine 9 

Longleaf  Pine 10 

Red  Oak  12 

Yellow  Poplar 13 

Douglas  Fir 13 

Proportion  of  Different  Elements  in  Total  Cost 14 

Conclusions  15 

APPENDIX 

Cost  Tables 17 

Land  and  Stocking 17 

Taxes  fc 17 

n 18 


FOREWORD. 


At  the  seventh  annual  meeting  of  the  National  Lumber  Manufacturers* 
Association  in  Seattle,  Washington,  July  12-14,  1909,  we  presented  a  paper 
entitled  "How  Much  Does  It  Cost  to  Grow  Timber?"  The  discussion 
occasioned  by  this  paper  and  subsequent  further  study  of  the  subject  have 
led  us  to  revise  the  original  manuscript  and  publish  it  in  the  present  form 
in  the  belief  that  the  principles  set  forth  are  sound  and  will  help  toward 
a  clearer  conception  of  the  conditions  which  must  be  established  in  the 
United  States  if  forest  conservation  is  to  be  a  reality.  This  statement  is 
made  with  a  full  realization  of  the  difficulty  in  forecasting  yields  and 
stumpage  prices  and  with  the  certain  knowledge  that  many,  perhaps  all, 
of  the  assumptions  necessary  to  the  exposition  will  be  keenly  criticized  by 
someone — forester  or  lumberman.  Nevertheless,  it  is  only  through  such 
discussions  as  these  that  clear  thinking  upon  a  highly  important  question 
can  be  attained,  and  it  is  in  this  spirit  that  the  following  pages  are  offered 
to  the  reader  by  THE  AUTHOES, 


224470 


THE  COST  OF  GROWING  TIMBER. 


INTRODUCTION. 

Four-fifths  of  the  timber  standing  in  the  United  States  today  is 
privately  owned.  Only  one-fifth  of  it  is  now  in  State  and  National  Forests. 
and  it  is  not  likely  that  for  many  years  to  come  even  as  much  as  half  of 
the  total  stumpage  of  the  country  will  be  in  public  forests.  In  the  future, 
as  in  the  past,  we  must  depend  on  private  forests  for  much  of  our  wood 
supply,  and  the  manner  in  which  private  forests  is  handled  is  therefore  of 
great  economic  importance. 

Practically  all  of  the  lumber  so  far  used  in  the  United  States  has  come 
from  natural,  matured  forests.  Capital  has  found  a  profit,  and  sometimes 
a  great  profit,  in  buying  up  virgin  timber  in  advance  of  the  demand  and 
holding  it  until  it  could  be  either  manufactured  or  sold  to  manufacturers 
at  a 'heavy  increase  in  price  over  that  paid  at  the  time  of  purchase;  that  is, 
much  of  the  profit  made"  in  the  lumber  industry  so  far  has  been  a  speculative 
profit.  The  exhaustion  of  the  supply  of  virgin  timber  will  lessen  the 
chances  for  speculation  and  more  closely  restrict  profits  to  those  which  arise 
from  growing  and  manufacturing  timber. 

The  so-called  "cost  of  production"  now  calculated  by  manufacturers  is 
merely  a  harvesting  cost,  not  a  cost  which  includes  the  expense  of  growing 
the  timber  as  well  as  that  of  logging  and  manufacturing  it.  The  growing 
of  timber  is  analogous  to  the  growing  of  wheat  or  corn,  except  that  in  the 
latter  case  the  crop  is  sown,  grown,  harvested,  and  marketed  within  a  year, 
while  in  the  former  case  the  same  series  of  operations  may  require  from 
50  to  100  years.  The  elements  of  cost  are  the  same  in  both.  Capital  will 
seek  investment  in  raising  neither  wheat  nor  timber  unless  there  is  a  reason- 
able chance  for  profit.  We  have  abundant  data  upon  the  cost  of  producing 
the  great  agricultural  staples,  but  few  data  upon  the  cost  of  growing 
timber. 

A  permanent  timber  supply  will  not  be  maintained  by  private  effort 
at  less  than  the  cost  of  production.  With  sufficient  knowledge  of  the  cost 
of  land  and  stocking,  growth  and  yield,  we  can  estimate  what  the  cost  of 
growing  any  kind  of  timber  will  be  and  compare  it  with  the  present 
stumpage  price.  This  comparison  will  show  whether  the  stumpage  price 
may  be  expected  to  go  up  or  down  in  the  future  and  will  indicate  the 
minimum  amount  we  may  have  to  pay  for  timber.  Of  course,  we  have  no 
assurance  that  timber  will  eventually  sell  at  the  bare  cost  of  production, 
for,  if  a  great  shortage  results  because  of  our  general  imprudence  in  failing 
to  grow  timber,  or  because  of  unexpectedly  heavy  demands  for  it,  the 
selling  price  will  go  far  above  the  cost  of  production.  On  the  other  hand, 
if  a  certain  species  grows  slowly  and  yields  lightly,  or  if  the  soil  which  it 
requires  be  too  expensive,  so  that  the  cost  becomes  abnormally  high,  it  may 
be  superseded  by  timber  of  other  kinds,  which  may  be  grown  more  cheaply. 
In  this  case,  the  price  would  never  equal  the  cost  of  production. 

It  is  the  purpose  of  this  paper  to  present  a  method  of  analysis  of  the 


elements  of  cost  in  growing  timber.  The  assumptions  made  are  thought  to 
be  fair  and  to  approximate  the  usual  conditions  under  which  the  various 
species  must  be  grown.  With  a  right  method  of  computation  established, 
those  who  have  need  to  do  so  can  supply  the  necessary  factors  and  determine 
the  cost  of  production  for  particular  cases.  With  these  considerations  in 
mind,,  the  following  discussion  is  given: 

ELEMENTS   OF  COST. 

There  are  five  main  elements  of  cost  in  the  growing  of  timber.  They 
are:  (1)  The  value  of  the  land;  (2)  the  stocking1  of  it  with  young  trees; 
(3)  the  administration  of  the  operation  and  the  protection  of  the  growing 
timber;  (4)  the  taxes;  (5)  the  rate  of  interest. 

The  profit  or  loss  at  the  end  of  a  given  period  will  be  determined  by 
the  relation  between  the  combined  amounts  of  these  investments  at  the 
proper  rate  of  interest  and  the  value  of  the  stumpage  of  the  resulting  stand 
of  timber  at  prices  then  obtainable ;  or,,  the  total  amount  of  the  investments 
at  compound  interest,  divided  by  the  total  yield,  will  give  the  absolute  cost 
of  production  per  unit  of  yield. 

In  Tables  1  to  6  are  brought  together  the  best  figures  and  available 
estimates  upon  six  important  species — white  pine,  loblolly  pine,  longleaf 
pine,  red  oak,  yellow  poplar  and  Douglas  fir.  The  following  basic 
assumptions  are  made: 

LAND  VALUE  AND  STOCKING. 

The  land  as  such,  regardless  of  what  forest  growth  there  may  be  on  it, 
and  assumed  to  be  unfit  for  ordinary  agricultural  crops,  is  valued  uniformly 
at  $3  per  acre. 

Assuming  that  the  land  must  be  fully  planted  with  young  trees,  a 
charge  of  $7  per  acre  is  allowed.  The  results  obtained  by  the  State  of 
New  York  and  other  extensive  planters  indicate  that  this  amount  should 
be  sufficient  in  planting  operations  of  considerable  magnitude.  Of  course, 
if  cut-over  land  is  restocking  naturally  with  young  trees,  it  is  worth  more 
than  bare  land,  but  the  increased  cost  of  the  land  should  be  approximately 
equal  to  the  amount  that  would  have  to  be  spent  for  planting.  Planting- 
should  be  unnecessary  in  many  cases,  since  it  is  often  possible  to  obtain 
natural  reproduction  at  low  cost,  if  proper  cutting  methods  are  used. 
Whether  we  assume  a  value  of  $3  per  acre  for  bare  land  and  a  cost  of 
planting  of  $7  yer  acre,  or  allow  $10  .per  acre  for  land  naturally  stocked 
with  young  trees,  the  initial  investment  remains  the  same.  For  these 
reasons  the  cost  of  land  and  stocking  are  summarized  together  in  the  tables. 

Many  will  probably  think  that  the  charges  for  land  value  and  stocking 
are  placed  too  low,  and  this  is  probably  true  in  certain  instances.  It  is 
deemed  better,  however,  to  calculate  the  cost  of  growing  timber  with  the 
lowest  possible  original  investment,  than  to  run  into  figures  which,  while 
entirely  true  for  some  conditions,  will  yet  seem  preposterous  to  the  unin- 
formed. There  is  also  some  merit  in  placing  the  fixed  charges  for  all 
species  at  the  same  amount.  This  brings  out  more  clearly  the  differences 
in  final  costs  due  to  growth  and  yield. 

ADMINISTRATION    AND    PROTECTION. 

The  cost  of  administration  and  protection  will  vary  greatly  with  local 
conditions  and  the  size  of  the  operation.  In  these  calculations,  they  are 


combined  and  conservatively  estimated  at  5  cents  per  acre  annually.  Pro- 
tection means  chiefly  the  keeping  out  of  fire,  and  on  large  tracts,  the  neces- 
sary labor  force  can  be  so  managed  as  to  make  the  amount  of  this  item 
comparatively  small. 

Lumbermen  maintain,  and  often  justly  so,  that  at  present  conditions 
are  too  hazardous  to  warrant  the  long  time  investment  required  to  produce 
timber.  It  is  assumed  in  this  paper  that  the  forest  owner  has  the  benefit  of 
more  efficient  State  and  local  measures  for  fire  prevention  than  now  prevail. 
Until  he  has,  he  is  not  likely  to  look  favorably  on  timber  growing  on  a 
large  scale  as  a  legitimate  commercial  enterprise.  The  risk  from  fire,  wind 
and  insects  cannot  be  closely  predicted  any  more  than  can  the  future  price 
of  lumber.  We  know  that  eventually  fires  will  be  controlled,  though  occa- 
sionally forests  will  be  destroyed,  even  with  the  best  system.  On  the  whole, 
damages  from  wind  and  insects  are  light  and  local  and  do  not  lead  to  such 
heavy  losses  as  does  fire. 

There  is  now  no  insurance  for  standing  timber  in  this  country,  nor 
will  there  be  until  our  forests  are  somewhere  near  as  safe  as  the  German 
forests.  Until  conditions  become  such  as  to  make  either  commercial  or 
mutual  insurance  feasible,  there  remains  an  element  of  hazard  in  timber 
investments,  allowance  for  which  will  be  made  by  each  investor  as  seems 
to  him  best.  Where  reasonable  -  protection  is  not  furnished,  permanent 
forest  investment  is  impossible. 

TAXES. 

Two  methods  of  taxing  timber  are  shown:  Case  1,  the  method  now 
in  general  use,  and  Case  2,  a  proposed  tax  upon  the  yield  only,  to  be  paid 

when  the  timber  is  cut. 

CASE  1. 

Taxes  as  now  levied  are  extremely  variable,  but  they  average  about  1 
per  cent  of  the  actual  value  of  the  property.  Since  assessors  pay  little 
attention  to  young  growth  before  it  reaches  merchantable  size,  the  taxes 
are  assumed  to  be  equivalent  to  10  cents  per  acre  per  year  (or  1  per  cent 
of  the  initial  cost  of  land  and  stocking)  up  to  the  date  when  it  is  possible 
to  make  the  first  cut.  Thereafter  they  are  placed  at  1  per  cent  of  the 
actual  stumpage  value  of  the  timber  plus  the  original  land  value  ($3  per 
acre),  with  reassessments  at  the  periods  for  which  yields  are  given.  With 
the  exception  of  loblolly  pine,  this  is  every  ten  years. 

CASE   2. 

If  a  given  investment  nets  4  per  cent,  an  annual  tax  of  1  per  cent 
(one-fourth  of  the  annual  income)  is  equivalent  to  a  final  tax  of  one-fourth, 
or  25  per  cent  of  the  yield.  Since  we  do  not  know -what  stumpage  values 
will  be  when  the  timber  is  cut,  the  calculation  of  the  tax  on  yield  is  made 
by  simply  reducing  the  yield  by  the  same  percentage  as  the  percentage  of 
tax,  and  then  figuring  the  cost  of  producing  this  reduced  yield  without 
taxes;  that  is,  if  25  per  cent  of  the  selling  price  of  the  stumpage  goes  to 
the  public  in  lieu  of  annual  taxes,  the  cost  of  growing  the  timber  is  the 
same  as  if  75  per  cent  of  the  given  yield  had  been  obtained  with  no  tax 
at  all. 

With  the  interest  rate  at  5  per  cent,  the  final  tax  must  be  20  per  cent 
to  yield  a  return  equivalent  to  a  1  per  cent  annual  tax,  and  similarly,  with 


interest  at  6  per  cent,  the  final  tax  becomes  16%  per  cent.  If  timberland 
were  valued  and  taxed  annually  according  to  the  income  it  produced,  the 
two  methods  would  yield  exactly  the  same  amount  of  tax. 

As  a  matter  of  fact,  the  present  method  of  taxing  is  not  applied  in 
the  scientific  manner  outlined  in  Case  1,  so  that  the  two  methods  would 
give  still  more  widely  divergent  results  in  practice  than  those  indicated  in 
the  subsequent  tables.  The  tax  on  yield  (Case  2)  is  higher  than  the  common 
tax  for  the  shorter  periods  (except  for  small  yields  and  low  stumpage 
prices)  and  lover  in  the  longer  periods.  Since  the  tax  on  yield  is  graduated 
according  to  production,  it  takes  the  same  proportion  of  the  income  at  all 
periods,  while  the  general  property  tax  takes  an*  increasing  proportion,  and 
must  sooner  or  later  force  cutting.  In  other  words,  the  present  system  of 
taxation  tends  to  undertax  young  growth  and  overtax  larger  timber. 

The  tax  on  yield  falls  at  a  time  when  the  owner  of  the  timber  is  best 
able  to  pay;  hence,  unlike  the  general  property  tax,  it  has  no  tendency 
to  make  him  cut  when  the  market  is  overstocked  or  before  the  timber  has 
reached  the  most  profitable  cutting  stage. 

RATE    OF   INTEREST. 

Kates  of  interest  depend  largely  on  the  degree  of  confidence  in  the 
investment,  or  the  risk  involved,  and  also  upon  the  ease  with  which  the 
money  invested  can  be  recovered.  Thus,  government  bonds  net  about  2  or 
3  per  cent;  well-secured  bonds  of  established  corporations,  4  or  5  per  cent; 
real  estate  mortgages,  from  4  to  6  per  cent;  industrial  stocks,  from  5  to  7 
per  cent.  Farm  rents  in  older  communities  are  regarded  as  satisfactory  by 
local  capital  if  they  give  a  net  income  of  4  or  5  per  cent. 

Forest  land  is  usually  the  poorest  land  in  the  region.  Often  it 
could  be  used  for  no  other  purpose.  A  forest  investment  is  a  long  time 
one.  With  proper  protection  it  is  safe  and  requires  little  attention  upon 
the  part  of  the  investor  during  the  time  that  it  runs.  Four  per  cent  is 
satisfactory  in  a  wide  variety  of  investments  which  are  attended  by  small 
risk  and  extend  over  a  long  time.  For  these  reasons  4  per  cent  has  been 
chosen  as  conservative  in  forest  calculations.  The  effect  of  higher  rates  of 
interest  is  also  discussed  in  connection  with  the  tables. 

THE   YIELD. 

For  white  pine,  loblolly  pine,  and  yellow  poplar  the  yields  are  based 
on  tables  compiled  from  actual  stands  on  good  forest  soil  of  various  ages 
and  fully  stocked,  such  as  should  result  from  planting.  For  longleaf  pine, 
red  oak,  and  Douglas  fir  the  yields  are  based  on  extensive  growth  studies 
and  on  estimates  of  the  number  of  trees~per  acre,  calculated  on  a  knowledge 
of  their  requirements  and  carefully  checked  with  other  species  of  similar 
requirements,  whose  normal  stand  per  acre  is  known.  The  figures  assumed 
for  both  of  the  above  groups  are  supported  by  data  on  growth  and  yield 
published  in  the  report  of  the  National  Conservation  Commission.  The 
average  sire  of  the  timber  is  given  in  diameter  at  breast  height,  the  standard 
point  of  measurement.  The  yield  is  stated  in  thousands  of  board  feet  of 
square-edged  lumber.  Thinnings  which  will  be  necessary  from  time  to 
time  should  pay  their  cost  and  in  some  cases  give  net  returns  which  are 
not  included  in  the  tables.  The  common  practice  in  New  England  is  to 
cut  round-edged  lumber  from  second-growth  white  pine  for  the  box  factories. 


If  it  is  desired  to  calculate  such  material,  the  yields  given  in  the  tables 
should  be  increased  about  20  per  cent. 

Lumbermen  may  object  that  the  yields  are  too  high,  since  the  finest 
stands  of  virgin  forest  do  not  yield  so  much.  The  comparison  of  a  natural 
untended  forest  with  a  planted  or  tended  one  is  parallel  with  that  of  a 
"volunteer"  crop  of  wheat  wholly  untended  with  one  carefully  drilled  in 
on  well-plowed  ground.  The  cultivated  crop  can  always  be  expected  to 
give  the  larger  yield. 

PKESENT    STUMPAGE    PEICES. 

The  present  stumpage  prices  quoted  are  only  approximations,  since  a 
number  of  factors,  such  as  ease  of  logging,  stand'  per  acre,  distance  from 
market,  etc.,  cause  wide  variations.  Stumpage  prices  actually  obtained  vary 
according  to  age  only  in  a  rough  way  as  the  timber  appears  to  the  buyer 
large,  medium  or  small.  Most  of  the  timber  on  the  majket  now  is  either 
very  old  virgin  stuff  or  young  so-called  "sap  timber/'  For  consistent  calcu- 
lations, however,  it  is  necessary  to  assume  stumpage  values  in  the  tables  and 
grade  them  according  to  age.  For  this  purpose  they  are  deemed  fair. 

WHITE  PINE. 

Assuming  the  factors  mentioned,  the  outlook  for  white  pine  under  the 
conditions  specified  in  Table  1  is  very  good.  Case  1  shows  a  stumpage  cost 
of  $2.96  per  thousand  feet  at  40  years  and  a  stumpage  price  of  $5.  The 
stumpage  cost  is  below  the  present  stumpage  price  to  between  70  and  80 
years.  At  80  years  the  cost  is  $9.61  per  thousand,  with  an  estimated 
stumpage  price  of  $9  per  thousand.  At  90  years  the  cost  is  $3.95  per 
thousand  more  than  the  estimated  selling  price.  From  90  years  on  the 
cost  and  selling  price  would  rapidly  diverge  as  the  effect  of  compound 
interest  became  greater. 

Case  2,.  in  which  there  is  a  tax  on  the  yield  only,  shows  a  much  more 
favorable  condition  for  investors  in  the  older  age  classes.  Up  to  nearly 
50  years  this  method  makes  the  cost  slightly  greater  than  under  Case  1, 
but  still  much  under  the  selling  price.  For  older  timber  the  tax  on  yield 
alone  gives  a  reduced  cost  as  compared  with  the  ordinary  method.  At  90 
years  the  difference  is  $4.74  per  thousand  in  favor  of  the  tax  on  yield. 

Placing  the  original  cost  of  land  and  stocking  at  $15  per  acre  instead 
of  $10  gives  reproduction  costs  under  Case  1  of  $4.15,  $4.68  and  $6.18  per 
thousand  feet  at  40,  50  and  60  years,  respectively — all  well  below  the 
stumpage  prices. 

Table   1. — White  Pine  in  JVeie   England. 

CASE    1. 
Land  and  stocking,   $10   per  acre ;   administration   and  protection,   5  cents  per   acre  ; 


Land  and  stocking,  $10  per  acre ;  administration  t\ 
taxes,  10  cents  per  acre,  up  to  40  years ;  thereafter,  1 
assessment  every  10  years  ;  interest,  4  per  cent. 


per   cent  actual    value,   with   re- 


Land        Adminstra- 


AGE  and 

YRS.  stocking. 

40 $  45.01 

50 68.07 

60 102.20 

70 152.72 

80 227.50 

90..  .    338.19 


tion  and 

protection. 

$  4.75 

7.63 

11.90 

18.21 

27.56 

41.40 


Taxes. 

$     9.50 

26.43 

61.09 

122.71 

225.19 

387.67 


Total 

cost. 

$  59.26 

102.13 

175.19 

293.64 

480.25 

767.26 


Present 

stumpage 

Size, 

•Yield 

Cos* 

price 

in. 

M.ft. 

per  M. 

per  M. 

6.7 

20 

$  2.96 

$  5.00 

9.0 

30 

3.40 

6.00 

10.7 

38 

4.61 

7.00 

12.0 

45 

6.53 

8.00 

12.9 

50 

9.61 

9.00 

14.5 

55 

13.95 

10.00 

Present 

Administra- 

Net 

stumpage 

tion  and 

Total 

Size, 

yield^ 

Cost 

price 

protection. 

Ta&cs. 

cost.* 

in. 

M.ft. 

perM. 

per  M. 

$  4.75 

One 

$  49.76 

6.7 

15.0 

$3.32 

$  5.00 

7.63 

quar- 

75.70 

9.0 

22.5 

3.36 

6.00 

11.90 

ter 

114.10 

10.7 

28.5 

4.00 

7.00 

18.21 

of 

170.93 

12.0 

33.7 

5.07 

8.00 

27.56 

yield 

250.06 

12.9 

37.5 

6.80 

9.00 

41.40 

379.59 

14.5 

41.2 

9.21 

10.00 

CASE   2. 

Xo  annual  tax  on  land  or  timber  ;  final  tax,  25  per  cent  of  yield.  Other  factors  as 
in  Case  1. 

Land 

AGE  and 

YRS.  stocking. 

40 $  45.01 

50 68.07 

60 102.20 

70.. 152.72 

80 227.50 

90 338.19 

*  Excluding  taxes. 

t  Three-fourths  of  total  yield,   one-fourth  deducted  in  lieu  of  taxes. 

The  cost  of  production  mounts  rapidly  with  higher  rates  of  interest. 
At  5  per  cent,  in  Case  1,  with  the  other  factors  unchanged,  the  taxes  in 
50  years  amount  to  $32.63,  administration  and  protection  to  $10.47,  land 
and  stocking  to  $111.67,  a  total  of  $154.77,  or  $5.16  per  thousand,  an 
increase  of  $1.76  per  thousand  over  the  cost  at  4  per  cent.  At  60  years  at 
5  per  cent,  the  taxes  come  to  $76.17,  administration  and  protection  $17.68, 
land  and  stocking  $183.79,  a  total  of  $277.64,  or  $7.31  per  thousand,  $2.70 
per  thousand  more  than  at  4  per  cent.  If  a  stumpage  price  of  $7  per 
thousand  for  60-y ear-old  timber  is  obtained,  it  will  give  practically  5  per 
cent  on  the  investment  under  the  conditions  above  specified. 

With  interest  at  5  per  cent,  and  the  only  tax  one  of  20  per  cent  of  the 
yield,  the  stumpage  cost  in  50  years  will  be  $5.09  per  thousand,  and  in  60 
years,  $6.63  per  thousand.  Using  6  per  cent  interest  in  'the  calculation 
gives  for  Case  1  a  cost  of  $7.90  per  thousand  at  50  years,  and  of  $11.89 
per  thousand  at  60  years.  Taxing  the  yield  16%  per  cent,  with  6  per  cent 
interest,  we  get  a  cost  of  $7.83  per  thousand  at  50  years,  and  of  $11.19  at 
60  years.  With  the  older-age  classes,  the  increase  in  cost  by  using  6  per  cent 
is  even  more  marked. 

The  growing  of  white  pine  in  New  England  at  present  stumpage  prices 
should  be  profitable.  On  a  50-year  rotation  under  the  conditions  specified 
in  Case  1,  there  is  $2.60  per  thousand  profit  above  4  per  cent  interest  on 
the  investment.  At  60  years,  the  net  profit  above  4  per  cent  is  $2.39  per 
thousand,  and  at  70  years,  $1.47  per  thousand  feet.  Judged  from  the 
economic  standpoint  alone,  white  pine  stumpage  prices  have  gone  high 
enough.  They  leave  a  safe  margin  above  the  actual  cost  of  production  to 


encourage  the  inyestor. 


LOBLOLLY  PINE. 


The  method  of  estimating  the  cost  for  loblolly  pine  (Table  2)  is 
identical  with  that  for  white  pine,  except  that  a  reassessment  is  assumed 
every  5  years  to  correspond  with  the  yields,  which  are  for  5-year  periods. 
Owing  to  the  very  rapid  growth  of  loblolly,  or  old-field  pine,  in  the  coastal 
region  of  the  Carolinas,  Virginia,  and  Maryland,  the  first  yields  can  be 
obtained  in  25  years  under  favorable  conditions.  The  figures  indicate  a 
cut  of  12,000  feet  at  that  age  from  fully  stocked  stands.  This  is  of  timber 
averaging  nearly  8  inches  in  diameter,  which  is  suitable  for  boxes  and  crates. 
At  40  years  the  estimated  yield  is  19,000  feet  per  acre  of  timber  averaging 
10.6  inches  in  diameter,  which  will  make  small  lumber  or  railroad  ties. 
The  estimated  cost  is  $3.42  per  thousand  under  Case  1,  and  $3.48  under 


Case  2.  At  50  years,  the  yield  is  23,000  feet  of  12-inch  timber,  which 
means  a  range  of  from  8  inches  to  18  inches.  The  data  at  hand  do  not 
furnish  sufficient  basis  for  detailed  estimates  beyond  50  years.  For  larger 
material,  say  70  years  old,  the  cost  would  rise  to  about  $8  per  thousand. 

Table  2. — LoWolly  Pine  in  the  Carolinas  and  Virginia. 
CASE   1. 

Land  and  stocking,  $10  per  acre ;  administration  and  protection,  5  cents  per  acre  ; 
taxes  10  cents  per  acre,  up  to  25  years ;  thereafter,  1  percent  actual  value,  with  re- 
assessment every  5  years ;  interest,  4  per  cent. 

Present 
Land     Administra-  stumpage 


AGE 

and 

tion  and 

Total 

Size, 

Yield 

Gost        price 

YES. 

stocking. 

protection.  Taxes. 

cost. 

in. 

M.  ft. 

ver  M.    perM. 

25  

..!..$      *>3  66 

$     2.08     $     4.16 

$       29.90 

7.8 

12 

$  2.49     $   2.00 

30  

29  43 

2.80           6.52 

38^75 

s!o 

15 

2.58          2.50 

35.  . 

36  46 

3.68          10.12 

50.26 

9.8 

17 

2.96          3  00 

40 

45  01 

4.75          15.24 

65.00 

10.6 

19 

3.42          3  50 

45  

...         55  41 

6.05          22.31 

83.77  ' 

11.4 

21 

3.99          4.00 

50  

68  07 

7.63        .81.86 

107.56 

12.2 

23 

4.68          4.50 

CASE   2. 

No  annual 

tax  on  land  or 

timber  ;  final  tax, 

25  percent 

of  yield.     Other  factors  as 

In  Case  1. 

Present 

Land 

Administra- 

Net 

stumpage 

AGE 

and 

tion  and 

Total 

Size, 

yield^ 

Cost       price 

YES. 

stocking. 

protection.  Taxes. 

cost.* 

in. 

M.ft. 

per  M.    perM. 

25  

$      23  66 

$     2.08        One 

$       25.74 

7.8 

9.0 

$  2.86     $  2.00 

30  

29  43 

2.80       quar- 

32.23 

8.9 

11.2 

2.88          2.50 

35  

36  46 

3.68       ter  of 

40.14 

9.8 

12.7 

3.16          3.00 

40 

45  01 

4.75        yield 

49.76 

10.6 

14.3 

3.48          3  50 

45  

55  41 

6.05 

61.46 

11.4 

15.7 

3.90          4.00 

50.. 

68.07 

7.63 

75.70 

10  o 

17.2 

4.40          4.50 

*  Excluding  taxes. 

t  Three-fourths  of  total  yield,  one-fourth  deducted  in  lieu  of  taxes. 

Since  much  of  the  loblolly  pine  grows  upon  soil  that  has  considerable 
agricultural  value,  the  effect  of  higher  priced  land  must  be  taken  into 
account.  Allowing  $15  per  acre  for  land  and  stocking,  under  Case  1,  the 
cost  at  40  years  is  $4.67  per  thousand,  and  at  $20  per  acre  it  is  $5.92  per 
thousand,  which  is  very  reasonable. 

With  either  method  of  taxation,  the  cost  of  producing  loblolly  pine  is 
low,  and  in  most  cases  less  than  the  present  stumpage  prices.  It  will 
evidently  pay  to  grow  loblolly  pine  timber  under  such  conditions  as  above 
specified. 

LONGLEAF  PINE. 

Longleaf  pine  is  a  slow-growing  species,  and  it  requires  almost  90  years 
to  reach  a  size  attained  by  loblolly  pine  in  50  years,  or  by  white  pine  in  80 
years.  Moreover,  the  trees  will  not  grow  in  as  dense  stands  as  white  pine. 
This  lessens  the  yield.  It  is  assumed  in  Table  3  that  the  first  cutting  stage 
will  be  reached  in  70  years,  when  the  timber  should  average  about  10  inches 
in  diameter  and  give  a  yield  of  17,000  feet  per  acre,  the  same  yield  as  for 
loblolly  pine  at  35  years.  In  longleaf  pine  the  first  cutting  diameter  is  set 
higher  than  in  loblolly  or  white  pine,  because  longleaf  is  not  so  suitable 
for  box  boards  and  other  small-sized  material.  It  will  be  noted  how  tre- 
mendously the  cost  of  growing  increases  with  age,  due  to  the  effect  of 
compound  interest  and  comparatively  small  yields.  At  70  years  under  the 
common  method  of  taxation,  the  estimated  cost  is  $12.20  per  thousand.  At 

10 


100  years,  with  timber  averaging  only  a  little  more  than  14  inches  in 
diameter,  which  means  a  range  of  from  10  inches  to  20  inches,  the  cost  is 
$22.28  per  thousand;  and  at  120  years,  with  timber  averaging  16.4  inches 
in  diameter  the  cost  is  $42.23  per  thousand.  While  taxes  pile  up  heavily, 
they  are  far  from  being  the  most  important  item  in  the  investment.  Most 
of  the  cost  is  due  to  the  interest  upon  the  land  and  growing  stock.  At  70 
years  this  amounts  to  more  than  four  times  as  much  as  the  taxes,  and  at 
120  years  it  is  over  three  times  as  much.  The  cost  for  administration  and 
protection  ranges  from  $1.07  per  thousand  at  70  years  to  $3.61  per 
thousand  at  120  years. 

With  the  only  tax  one  of  25  percent  of  the  yield,  the  cost  is  slightly 
greater  throughout  than  under  Case  1.  This  is  because  the  stumpage  price 
is  low  and  the  yield  small.  With  higher  stumpage  prices  and  yields,  the 
tax  on  yield  is  more  favorable  to  the  owner  than  is  the  general  property 
tax. 

Table  3. — Longleaf  Pine  in  the  South. 
CASE   1. 


Land  and  stocking,  $10  per  acre ;  adminsitration  and  protection,  5  cents  per  acre ; 
taxes,  10  cents  per  acre  up  to  70  years,  thereafter  1  percent  actual  value,  with  reassess- 
ment every  ten  years  ;  interest,  4  percent. 

Present 

Lfand     Administra-  stumpage 

Aoa  and        tion  and  Total       Size,    field      Cost        price 

YES.  stocking,  protection.    Taxes.          cost.         in.      M.ft.    per  M.    perM. 

70 $    152.72     $18.21     $36.43     $    207.36       9.9     17         $12.20     $2.00 

80 227.50         27.56          58.36  313.42     11.4     23  13.63          2.50 

90 338.19         41.40          93.64  473.23     12.9     28  16.90          3.00 

100 502.05         61.88        149.03  712.96     14.2     32  22.28          3.50 

110 ,744.60         92.20       234.37        1,071.17     15.3     35  30.60          4.00 

120 1,103.63       137.08       364.04        1,604.75     16.4     38  42.23          4.50 


CASE    2. 


in  Case  1. 


No  annual  tax  on  land  or  timber  ;  final  tax,  25  percent  of  yield.     Other  factors  as 


AGE 

YKS. 
70., 
80.. 
90.. 

100.  . 

110.. 


Land      Administra- 

and         tion  and 
stocking,  protection. 


$    152.72  $  18.21 

227.50  27.56 

338.19  41.40 

502.05  61.88 

744.60  92.20 

120 ; 1,103.63  137.08 


Taxes. 

One 

quar- 
ter 
of 

yield 


Total 
cost.* 

\  170.93 
255.06 
379.59 
563.93 
836.80 

1,240.71 


Present 

Net  stumpage 

Size,  yield^      Cost       price 
M.  ft.    per  M.    per  M. 
12.7     $13.46     $  2.00 
14.83 
18.08 
23.50 
31.82 
43.53 


in. 
9.9 
11.4 
12.9 
14.2 
15.3 
16.4 


17.2 
21.0 
24.0 
26.3 
28.5 


2.50 
3.00 
3.50 
4.00 
4.50 


*  Excluding  taxes. 

t  Three-fourths  of  total  yield,  one-fourth  deducted  in  lieu  of  taxes. 


The  conclusion  to  be  drawn  from  the  longleaf  pine  table  is  that, 
under  the  conditions  specified,  it  can  not  be  grown  profitably.  The  stump- 
age  costs  are  higher  than  it  is  likely  that  stumpage  prices  will  go.  It 
may  be  that  100  years  hence  longleaf  pine  stumpage  averaging  14  inches 
in  diameter  will  sell  for  $22  per  thousand,. but  the  chance  that  it  will  do  so 
is  not  great  enough  to  lead  capital  to  purchase  bare  land  and  plant  it  to 
longleaf  pine  trees. 

If  we  are  to  have  longleaf  pine  permanently  we  must  evidently  favor 
it.  Since  the  greatest  element  of  cost  is  the  land  and  stocking,  this  item 
should  be  decreased  if  possible.  If  the  investor  can  get  longleaf  pine  land 
with  sufficient  young  growth  upon  it  eventually  to  produce  a  full  merchant- 

11 


able  crop  for  $5  per  acre,  instead  of  $10,  as  given  in  the  table,  he  will  have 
a  stumpage  cost  of  $6.55  per  thousand  at  70  years,  with  the  present  method 
of  taxing,  and  of  $7.33  per  thousand,  with  the  only  tax  one  of  25  percent 
of  the  yield.  With  land  and  stocking  at  $5  per  acre,  the  stumpage  cost  at 
100  years  becomes  $12.54  per  thousand  in  the  first  case,  and  $12.98  in  the 
second.  Thus,  while  the  growing  of  longleaf  pine  is  not  an  attractive 
investment  to  the  man  who  must  pay  from  $5  to  $10  per  acre  to  start  with, 
the  outlook  becomes  more  favorable  for  the  owners  of  large  areas  on  which 
natural  reproduction  can  be  secured  at  low  cost  by  leaving  a  few  seed  trees 
and  keeping  out  fires.  Under  such  conditions  there  is  an  opportunity  for 
the  profitable  growing  of  longleaf  pine. 

EED   OAK. 


The  first  cut  for  red  oak  is  set  at  40  years,  with  timber  averaging  10.3 
inches  in  diameter,  which  should  give  a  range  of  from  6  inches  to  16  inches 
and  a  yield  of  11,000  board  feet.  The  estimated  cost  (shown  in  Table  4) 
is  $5.39  per  thousand  for  Case  1,  and  $6.07  per  thousand  for  Case  2.  While 
in  both  cases  the  cost  of  production  runs  above  the  present  stumpage  prices, 
it  is  not  excessive  until  80  years,  when  it  is  $14.02  per  thousand  for  Case  1, 
and  $13,64  for  Case  2,  with  a  yield  of  25,000  feet  of  timber  averaging  16.7 
inches  in  diameter.  At  90  years,  with  a  tax  on  yield  only,  the  cost  is  $18-.70 
per  thousand  for  timber  averaging  18  inches  in  diameter,  which  will  give 
many  trees  running  up  to  24  inches  or  more.  With  the  increase  which  may 
be  expected  in  stumpage  prices,  the  chance  for  profitably  growing  red  oak 
of  the  smaller  sizes  is  evidently  very  good. 

Table  4. — Red  Oak  in  the  Southern  Hardicood  Region. 
CASE   1. 

Land  and  stocking,  $10  per  acre ;  administration  and  protection,  5  cents  per  acre  ; 
taxes,  10  cents  per  acre  up  to  40  years,  thereafter  1  percent  actual  value,  with  reassess- 
ment every  10  years  ;  interest,  4  percent. 

Present 

Land     Administra-  stumpage 

and,        tion  and 
stocking,  protection.    Taxes. 


AGE 
YRS. 

40. 

50. 


$  45.01     $     4.75  $     9.50 

68.07  7.63  17.06 

102.20  11.90  31.01 

152.72  18.21  55.37 

227.50  27.56  95.52 

90 338.19  41.40  159.74 

100..  502.05  61.88  259.47 


70. 

SO. 


Total 
cost. 
59.26 
92.76 
145.11 
226.30 
350.58 
539.33 
823.40 


Size, 
in. 
10.3 
12.4 
14.1 
15.4 
16.7 
18.0 


Yield 
M.It. 
11 
15 
19 
22 
25 
27 


19.0     29 


Cost 
per  M. 
$  5.39 
6.18 
7.64 
10.29 
14.02 
19.98 
28.39 


price 
per  M. 
$  2.00 
3.00 
4.00 
5.00 
6.00 
7.00 
8.00 


in  Case  1. 


A.;K 
YRS. 

40. 

50. 

60. 

70. 

80. 

90., 
100 .  . 


CASE   2. 
No  annual  tax  on  land  or  timber  ;  final  tax,   25  percent  of  yield.     Other  factors  as 


Land      Administra- 

and         tion  and 
stocking,  protection. 


45.01 
68.07 
102.20 
152.72 
227.50 
338.19 
502.05 


$  4.75 
7.63 
11.90 
18.21 
27.56 
41.40 
61.88 


Taxes. 
One- 
quar- 
ter 
of 
yield 


Present 

Net 

stitmpayc 

Total 

Size, 

yield^ 

Cost 

price 

cost.* 

in. 

M.ft, 

per  M. 

per  M. 

$  49.76 

10.3 

8.2 

$  6.07 

$2.00 

75.70 

12.4 

11.2 

6.76 

3.00 

114.10 

14.1 

14.3 

7.98 

4.00 

170.93 

15.4 

16.5 

10.36 

5.00 

255.06 

16.7 

18.7 

13.64 

6.00 

379.59 

18.0 

20.3 

18.70 

7.00 

563.93 

19.0 

21.8 

25.87 

8.00 

*  Excluding  taxes. 

t  Three-fourths  of  total  yield,  one-fourth  deducted  in  lieu  of  taxes. 


12 


YELLOW  POPLAR. 

The  prospects  for  yellow  poplar,  shown  in  Table  5,  are  somewhat 
better  than  for  red  oak.  It  grows  a  little  more  rapidly,  gives  a  little  greater 
yield,  and  has  a  correspondingly  lower  reproduction  cost.  At  50  years 
there  is  an  estimated  yield  of  18,000  feet  of  timber  averaging  12.8  inches 
in  diameter,  costing  $5.17  per  thousand  under  Case  1,  and  $5.61  under 
Case  2.  Yellow  poplar  is  such  a  highly  useful  wood  that  it  will  always  be 
needed  by  our  varied  industries.  We  can  evidently  obtain  the  smaller  sizes 
at  a  cost  which  is  not  excessive.  If  we  want  big  trees  we  must  pay  a  high 
price  for  them. 

Table  5. — Yellotc  poplar  in  the  southern  hardwood  region. 
CASE   1. 

Land  and  stocking,  $10  per  acre  ;   administration  and  protection,   5  cents  per  acre ; 

thereafter  1  percent  actual  value,  with  reassess- 


Land  and  stocking,   $10  per  acre  ; 
taxes,  10  cents  per  acre  up  to  40  years  ; 
ment  every  10  years  ;  interest,  4  percent 


AGK 

YKS. 

40 $  45.01 

50 68.07 

60 102.20 

70 152.72 

80 227.50 

90 338.19 

100 502.05 


Land     Administra- 
and        tion  and 
stocking,  protection. 


.  Present 
stumpage 

Total       Size,    Yield  Oost        price 

Taxes.          cost.         in.      M.  ft.  per  M.    per  M. 

5  4.75          $9.50         $  59.26     10.5     12  $  4.94        $2.00 

7.63          17.30             93.00     12.8     18  5.17          3.00 

11.90          32.44           146.54     14.7     23  6.37          4.00 

18.21          59.42           230.35     16.1     25  9.21          5.00 

27.56        103.31           358.37     17.3     27  13.27          6.00 

41.40        172.71           552.30     18.5     29  19.04          7.00 

61.88        280.34           844.27     19.5     31  27.23          8.00 

CASE   2. 


in  Case  1. 


AGE 
YRS. 

40. 

50. 

60. 

70. 

80. 

90. 
100. 


No  annual  tax  on  land  or  timber  ;   final   tax,  25  percent  of  yield.     Other  factors  as 


Land     Administra- 

and         tion  and 
stocking,  protection.  Taxes. 


45.01 
68.07 
102.20 
152.72 
227.50 
338.19 
502.05 


4.75 
7.63 
11.90 
18.21 
27.56 
41.40 
61.88 


One- 

quar- 

ter 

of 

yield. 


Total 
cost.* 
49.76 
75.70 
114.10 
170.93 
255.06 
379.59 
563.93 

Size, 
in. 
10.5 
12.8 
14.7 
16.1 
17..°, 
18.5 
19.5* 

Net 

yield^ 
M.ft. 
9.0 
13.5 
17.2 
18.7 
20.3 
21.8 
23.2 

Present 
stwnpage 
Cost  '    price 
per  M.    perM. 
$  5.53       $2.00 
5.61         3.00 
6.63         4.00 
9.14          5.00 
12.56          6.00 
17.41          7.00 
24.31          8.00 

*  Excluding  taxes. 

t  Three-fourths  of  total  yield,  one-fourth  deducted  in  lieu  of  taxes. 


DOUGLAS  FIR. 

From  every  viewpoint,  Douglas  fir  is  one  of  the  most  interesting 
species.  There  is  more  of  it  now  standing  than  of  any  other  timber  in  the 
United  States.  It  grows  rapidly  in  extremely  heavy  stands,  and  can  be 
protected  cheaply. 

Table  6  gives  estimates  of  the  cost  of  growing  Douglas  fir  in  the 
region  of  its  best  development  ;  that  is,  in  western  Washington  and  Oregon. 
The  first  cut  is  placed  at  40  years,  with  an  average  diameter  of  10.6  inches, 
and  a  yield  of  24,000  feet  per"  acre.  This  makes  the  cost  of  production  $2.47 
per  thousand  in  Case  1,  and  $2.76  in  Case  2.  At  70  years,  with  timber 
averaging  18.4  inches  in  diameter  and  ranging  from  14  inches  to  28  inches, 
the  yield  is  50,000  feet  per  acre,  making  the  cost  $4.50  per  thousand  in 
Case  1,  and  $4.56  in  Case  2.  At  100  years,  with  timber  averaging  more 


than  2  feet  in  diameter,  and  a  yield  of  70,000  feet  per  acre,  the  cost  is 
$11.46  per  thousand  for  Case  1,  and  $10.74  per  thousand  for  Case  2. 

Table  6. — Douglas  fir  in  western,  Oregon  and  Washington. 
CASE  1. 

Land  and  stocking,  $10  per  acre  ;  administration  and  protection,  5  cents  per  acre ; 
taxes,  10  cents  per  acre  up  to  40  years  ;  thereafter  1  percent  actual  value,  with  reassessment 
every  ten  years ;  interest  4  percent. 

Present 

Land    Administra- 

AGE  .  and        tion  and 

YRS.    .  stocking,  protection.  Taxes. 

40 $      45.01       $4.75     $     9.50 

7.63  17.30 
11.90  31:21 
18.21  54.29 
J7.56  91.22 
41.40  149.06 
61.88  238.26 


50 68.07 

60 102.20 

70.... 152.72 

80 227.50 

90 338.19 

100 502.05 


Total 

Size, 

Net              siumpage 
Yield      Cost        price 

cost. 

in. 

M.ft 

.    per  M. 

perM. 

$  59.26 

10.6 

24 

$  2.47 

$1.00 

93.00 

13.7 

35 

2.66 

1.25 

145.31 

16.2 

43 

3.38 

1.50 

225.32 

18.4 

50 

4.50 

1.75 

346.28 

20.5 

57 

6.08 

2.00 

528.65 

22.5 

64 

8.26 

.2.25 

802.19 

24.3 

70 

11.46 

2.50 

CASE   2. 


No  annual  tax  on  land  or  timber ;  final  tax  25  percent  of  yield. 
Case  1. 


Other  factors  as  in 


AGE 
YRS. 


Land      Administra- 

and         tion  and 
stocking,  protection.  Taxes. 


40 $  45.01  $  4.75  One 

50 68.07  7.63  quar- 

60 102.20  11.90  ter 

70 152.72  18.21  of 

80 227.50  27.56  yield. 

90 338.19  41.40 

100 .  502.05  61.88 


Total 

cost.* 

$  49.76 

75.70 

114.10 

170.93 

255.06 

379.59 

563.93 


Net 

Size,    yield  Cost 

in.     M.ft.t  perM. 

18.0  $  2.76 

26.3  2.88 

32.2  3.54 

37.5  4.56 

42.7  5.97 

48.0  7.91 

52.5  10.74 


10.6 
13.7 
16.2 
18.4 
20.5 
22.5 
24.3 


Present 
stumpage 
price 
per  M. 
$1.00 
1.25 
1.50 
1.75 
2.00 
2.25 
2.50 


*  Excluding  taxes. 

t Three-fourths  of  total  yield,  one-fourth  deducted  in  lieu  of  taxes. 


Because  of  the  rapid  growth  and  heavy  yield,  there  is  a  possibility 
of  getting  more  than  4  percent  from  a  Douglas  fir  investment.  At  5  per- 
cent, the  cost  of  growing  50-year-old  timber  is  $4.15  per  thousand  under 
Case  1,  and  $4.36  per  thousand  under  Case  2.  At  60  years,  it  is  $5.70  per 
thousand  for  Case  1,  and  $5.86  per  thousand  for  Case  2.  With  a  6  percent 
interest  rate,  the  cost  of  production  at  50  years  is  $6.49  per  thousand  for 
Case  1,  and  $6.70  per  thousand  for  Case  2.  At  60  years  it  is  $9.67  and 
$9.88  per  thousand,  respectively. 

All  things  considered,  the  outlook  for  Douglas  fir  is  distinctly  encour- 
aging. The  price  of  stumpage  is  certain  to  advance,  and  an  increase  of 
only  two  or  three  dollars  per  thousand  will  bring  it  to  reproduction  prices 
for  ages  up  to  70  or  80  years.  Such  increases  and  far  greater  ones  will 
likely  take'  place  before  the  timber  can  be  grown.  Cut-over  Douglas  fir 
land  containing  a  sufficient  quantity  of  young  growth  is  evidently  an 
excellent  investment  at  $10  per  acre.  On  the  large  areas  of  fir  forests 
which  are  still .  intact,  natural  reproduction  can  be  obtained  at  less  than 
planting  cost  and  profits  increased  accordingly. 

PEOPORTION  OF  DIFFERENT  ELEMENTS  IN  TOTAL  COST. 

In  order  to  see  more  clearly  the  influence  of  the  various  factors  in  the 
cost  of  growing  timber,  the  percentage  of  the  total  cost  contributed  by 


ii 


taxes,  protection,  and  land  and  stocking,  at  ages  of  50  and  90  years,  under 
Cases  1  and  2,  are  given  in  Table  7. 

Table  7. — Proportion  of  total  cost  of  growing  timber  caused  by    different   factors  under 

conditions  specified  in  Tables  1  to  6. 

CASE   1. 

FIFTY-YEAR    OLD   TIMBER NINETY-YEAR    OLD   TIMBER 

Administra-  Administra- 
tion and    Land  and  tion  and    Land  and 
Taxes,  protection,  stocking.  Total.  Taxes,  protection,  stocking.  Total. 
SPECIES —                  Percent.  Percent.  Percent.  Percent.  Percent.  Percent.  Percent.  Percent. 

White  Pine 25.9            7.5            66.6            100  50.5            5.4            44.1  100 

Loblolly   Pine 29.6            7.1            63.3            100  ...              .. 

Longleaf  Pine . .             ...            ...  19.8           8.7           71.5  100 

Red  Oak 18.4            8.2            73.4            100  29.6            7.7            62.7  100 

Yellow  Poplar 18.6            8.2            73.2            100  31.3            7.5            61.2  100 

Douglas   Fir 18.6            8.2            73.2            100  28.2            7.8            64.0  100 

CASE   2. 

All  species 20.0           8.1           71.9           100  20.0           8.7           71.3  100 

These  percentages  show  unmistakably  that  with  the  exception  of  old 
white  pine,  taxed  according  to  present  methods,  much  the  largest  proportion 
of  the  total  cost  is  due  to  land  and  stocking,  as  it  should  be.  On  the  other 
hand,  if  present  methods  of  taxation  are  strictly  carried  out,  they  take  an 
increasingly  larger  share  as  the  timber  grows  older.  For  90-year  white, 
pine  they  amount  to  more  than  one-half  the  total  cost,  due  to  high  stumpage 
prices,  and  for  red  oak,  yellow  poplar,  and  Douglas  fir  of  the  same  age  the 
taxes  come  to  28  to  31  percent  of  the  total  cost.  The  low  percentage  of 
taxes  for  longleaf  pine  at  90  years  is  because  at  that  age  it  has  not  yet 
reached  either  a  high  yield  or  great  value. 

The  statement  for  Case  2  emphasizes  the  point  previously  made  that 
in  some  instances  young  growth  is  undertaxed  by  present  methods,  while  hy 
the  same  methods  older  timber  is  almost  invariably  overtaxed.  It  maj 
easily  happen,  therefore,  that  while  land  and  stocking  usually  constitute 
much  the  largest  proportion  of  the  cost  of  growing  timber,  the  present 
system  of  taxing  may  be  the  determining  factor  in  the  decision  as  to 
whether  or  not  forest  conservation  shall  be  practiced  in  a  given  region. 
With  the  tax  on  yield  alone,  the  proportion  of  taxes  to  the  total  cost  is 
the  same  in  all  ages. 

The  cost  of  administration  and  protection  is  low  throughout.  In  no 
instance  does  it  equal  9  percent  of  the  total  cost  of  growing  the  timber, 
and  usually  is  less  than  8  percent.  Timber  can  be  protected  cheaply,  and 
the  cost  of  protection  should  not  be  a  serious  obstacle  to  forest  conservation. 

CONCLUSIONS. 

The  purpose  of  this  paper  is  to  outline  a  method  of  investigation  into 
the  cost  of  growing  timber  rather  than  to  say  definitely  what  the  costs, 
yields,  and  stumpage  prices  will  be  for  the  various  species  in  particular 
localities. 

Certain  general  conclusions,  however,  can  be  drawn.  It  is  evident 
that  present  stumpage  prices  of  white  pine  are  at  a  point  where  the  growing 
of  this  timber  should  yield  from  4  to  6  percent  compound  interest  for  a 
40  to  70  year  investment,  with  land  and  stocking  costing  not  more  than 
$10  per  acre.  The  growing  of  loblolly  pine  should  now  offer  a  return  of 
4  percent  compound  interest  for  investments  of  from  30  to  50  years,  with 

15 


land  and  stocking  at  $10  per  acre.  At  the  present  rate  of  increase  in 
stmnpage  values,  red  oak,  yellow  poplar,  and  Douglas  fir  will  shortly  bring 
remunerative  prices.  It  is  probable  that  cottonwood,  red  gum,  southern 
white  ash,  and  redwood  have  a  rate  of  growth  that  will  include  them  in  the 
list  of  species  which  will  soon  reach  stumpage  prices  covering  the  cost  of 
growing.  There  is  little  room  to  doubt  that  with  all  these  species  the 
stumpage  will  reach  a  reproduction  price  long  before  the  timber  can  be 
grown. 

Present  virgin  timber  is  nearly  always  of  greater  age  than  can  be 
grown  with  profit  hereafter.  This  old  timber  usually  has  a  larger  percentage 
of  the  higher  grades  than  "second-growth"  or  young  timber.  Hence,  in 
value,  virgin  stumpage  must  be  compared,  not  with  the  cost  of  the  younger 
timber,  but  with  that  of  the  older  classes.  Under  present  methods  of  taxa- 
tion, and  to  cover  a  4  percent  investment,  virgin  timber  values  should 
eventually  rise  to  at  least  the  cost  of  growing  saw  timber  from  12  to  24 
inches  in  diameter,  say  averaging  16  inches,  except  in  cases  where  cheaper 
woods  or  other  materials  will  furnish  satisfactory  substitutes. 

This  entire  discussion  has  assumed  an  intelligent  public  conception 
of  the  value  of  forest  property  and  the  necessity  for  its  protection  from 
fire.  Until  such  a  sentiment  crystallizes  into  efficient  measures,  rigidly 
enforced,  many  forest  investments  will  continue  to  be  hazardous.  In  some 
localities  conditions  are  already  such  that  forest  investments  on  a  moderate 
scale  are  reasonably  safe. 

Because  of  the  long  investments  required,  the  cost  of  growing  timber 
becomes  unreasonable  when  high  rates  of  interest  are  demanded.  If  private 
capital  is  unwilling  to  engage  in  it  for  an  income  of  4  to  5  percent,  then 
the  sooner  a  large  proportion  of  the  permanent  timber  land  of  the  country 
comes  into  possession  of  the  state  or  national  governments,  the  more 
hopeful  will  be  the  outlook  for,  future  timber  supplies.  The  chief  concern 
of  the  state  and  national  governments  is  the  public  welfare,  and,  moreover, 
they  can  profitably  engage  in  operations  at  an  even  lower  rate  of  interest 
than  4  percent. 


APPENDIX. 


COST  TABLES. 

.  To  facilitate  calculations  of  the  cost  of  growing  timber,  the  following 
tables,  which  show  the  charges  for  land  and  stocking,  taxes  and  protection 
by  decades  from  thirty  to  one  hundred  years,  at  various  rates,  have  been 
prepared.  The  amounts  for  the  several  items  are  identical  with  those  given 
for  the  corresponding  items  in  Tables  1  to  6  of  the  text,  except  that  in  the 
latter  tables  the  value  of  the  bare  land,  assumed  to  be  $3  per  acre,  is 
deducted  from  the  totals,  since  the  land  remains  an  asset  at  the  end  of  the 
operation.  For  strict  calculations,  therefore,  the  value  of  the  land  after 
cutting  takes  place  should  be  deducted  from  the  totals  for  land  and  stocking 
shown  below : 

LAND  AND  STOCKING. 


ORI 

Amount 
at  3 
YEARS  —  •  percent. 
30  $12.14 

GINAL    COS! 

Amount 
at  lt 
percent. 
$  16.22 
24.01 
35.53 
52.60 
77.86 
115.25 
170.60 
252.52 

:,  $5  PER 
Amount 
at  5 
percent. 
$  21.61 
35.20 
57.34 
93.40 
152.13 
247.81 
403.65 
657.51 

ACRE  

Amount 
at  6 
percent. 
$      28.72 
51.43 
92.10 
164.94 
295.39 
528.99 
947.35 
1,696.56 

ORIC 

Amount 
at  3 
percent. 
$  24.27 
32.62 
43.84 
58.92 
79.18 
106.41 
143.01 
192.19 

40 

16  31 

50  
00 

.      21.92 
29.46 

70 

39  59 

80  

53.20 

90 

71.50 

100.  . 

96.09 

Amount 

at  k 

percent. 

$  32.43 

48.01 

71.07 

105.20 

155.72 

230.50 

341.19 

505.05 


$10  PER 
Amount 

at  5 

percent. 

;      43.22 

70.40 

114.67 

186.79 

304.26 

495.61 

807.30 

1,315.01 


ACRE  — 

Amount 

at  6 

percent. 

$      57.44 

102.86 

184.20 

329.88 

590.77 

1,057.99 

1,894.70 

3,393.13 


—  ORIG 

Amount 
at  3 
YEARS  —  •  percent. 
30  $  3fl.4t 

INAL    COST 

Amount 
at  /, 
percent. 
$  48.65 
72.02 
106.60 
157.79 
233.57 
345.75 
511.79 
757.57 

•,    $15    PER 

Amount 
at  5 
percent. 
$      64.83 
105.60 
172.01 
280.19 
456.40 
743.42 
1,210.96 
1,972.52 

ACRE  

Amount 
at  6 
percent. 
$      86.15 
154.29 
276.30 
494.82 
'  886.16 
1,586.98 
2,842.05 
5,089.69 

ORIGINAL   COST,    $20   PER 

Amount      Amount       Amount 
at  3            at  4              at  5 
percent,      percent.       percent. 
$  48.55    $      64.87    $      86.44 
65.24            96.02          140.80 
87.68          142.13          229.35 
117.83          210.39          373.58 
158.36          311.43          608.53 
212.82          461.00          991.23 
286.01          682.39      1,614.61 
384.37      1,010.10      2,630.02 

ACRE  

Amount 
at  6 
percent. 
$    114.87 
205.71 
368.40 
659.77 
1,181.54 
2,115.97 
3,789.40 
6,786.25 

40.  ... 

48.93 

50  .... 

65.76 

60 

88  37 

70    ... 

118.77 

SO 

159  61 

90 

214.51 

100... 

.  .    288.28 

TAXES.* 


A  ill  \J  U  *x  i.     A  j.     o     r  r>  ivu  r-  *>  A 

Yearly         Yearly       Yearly          Yearly 

AJAWUOTJfc       AA 

Yearly        Yearly 

1      rJMM*MUVJ 

Yearly 

Yearly 

cost  per 

cost  pet- 

cos*  per 

cost  per 

cost  per 

cost  per 

cost  per 

cost  per 

acre, 

acre, 

acre, 

acre, 

acre, 

acre, 

acre, 

acre, 

YEARS  — 

10  cents. 

15  cents. 

20  cents. 

25  cents. 

10  cents. 

15  cents. 

20  cents. 

25  cents. 

oO 

$  4.76 

$  7.14 

$     9.52 

$  11.89 

$     5.61 

$     8.41 

$  11.22 

$  14.02 

40  

7.54 

11.31 

15.08 

18.85 

9.50 

14.25 

19.01 

23.76 

50      .... 

11  28 

16.92 

22.56 

28.20 

15.27 

22.90 

30.53 

38.17 

60 

16  31 

24.46 

32.61 

40.76 

23.80 

35.70 

47.60 

59.50 

70      .... 

23.06 

34.59 

46.12 

57.65 

36.43 

54.64 

72.86 

91.07 

SO      .... 

32.14 

48.20 

64.27 

80.34 

55.12 

82.69 

110.25 

137.81 

<)0 

44  33 

66.50 

88.67 

110.84 

82.80 

124.20 

165.60 

207.00 

100.  . 

60.73 

91.09 

121.46 

151.82 

123.76 

185.64 

247.52 

309.41 

*  If  it  is  desired  to  compute  the  taxes  at  some  rate  not  given  above,  the  amount  may 
be  obtained  by  using  either  the  figures  given  in  the  table  for  protection  or  by  combining 
them  with  those  in  this  table.  For  example,  the  total  tax  at  a  rate  of  19  cents  for  sixty 
years  at  3  percent  is  equivalent  to  the  total  tax  at  4  cents  ($6.52  in  the  protection  table) 
plus  the  total  tax  at  15  cents  ($24.46  in  the  tax  table),  or  $30.98. 

IT 


\.    i  i  /  c   >  -  X    :  -i-t-^4¥PtfNt  W  5   PERCENT  

AMOUNT   AT 

6   PERCENT  

Yearly 

Yearly 

Yearly 

Yearly 

Yearly 

Yearly 

Yearly 

Yearly 

cost  per 

cost  per 

cost  per 

cost  per 

cost  per 

cost  per 

cost  per 

cost  per 

acre, 

acre, 

acre, 

acre, 

acre, 

acre, 

acre, 

acre, 

YEARS  — 

10  cents. 

IS  cents. 

20  cents. 

25  cents. 

10  cents. 

15  cents. 

20  cents. 

25  cents. 

30  

$     6.64 

$     9.97 

$  13.29 

$  16.61 

$     7.91 

$  11.86 

$      15.81 

$     19.76 

40  

.     12.08 

18.12 

24.16 

30.20 

15.48 

23.21 

30.95 

38.6!) 

50  

20.93 

31.40 

41.87 

52.34 

29.03 

43.55 

58.07 

72.58 

60  

.      35.36 

53.04 

70.72 

88.40 

53.31 

79.97 

106.63 

133.28 

70  

,      58.85 

88.28 

117.71 

147.13 

96.80 

145.19 

193.59 

241.99 

80  

97.12 

145.68 

194.25 

242.81 

174.66 

262.00 

349.33 

436.66 

90  

,    159.46 

239.19 

318.92 

398.65 

314.12 

471.17 

628.23 

785.29 

100  

261.00 

391.50 

522.01 

652.51 

563.85 

845.78 

1,127.71 

1,409.64 

ADMINISTRATION   AND   PROTECTION. 


Yearly  Yearly  Yearly 

Yearly  Yearly 

Yearly 

Yearly 

Yearly  Yearly 

Yearly  Yearly  Yearly 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost      cost 

per 

per 

per 

per 

per 

per 

per 

per 

per 

per 

per        per 

acre,l 

acre,  2 

acre,S 

acre,  it 

acre,  5 

acre,  6 

acre,  1 

acre,  2 

acre,  3 

acre,} 

acre,  5  acre,  6 

YRS. 

cent. 

cents. 

cents. 

cents. 

cents. 

cents. 

cent. 

cents. 

cents. 

cents. 

cents,    cents. 

30.. 

.$0.48 

$0.95 

$1.43 

$1.90 

$2.38 

$2.85 

$0.56 

$1.12 

$1.68 

$2.24 

$2.80    $3.37 

40.. 

.      .75 

1.51 

2.26 

3.02 

3.77 

4.52 

.95 

1.90 

2.85 

3.80 

4.75       5.70 

50.. 

.    1.13 

2.26 

3.38 

4.51 

5.64 

6.77 

1.53 

3.05 

4.58 

6.11 

7.63      9.16 

60.. 

.    1.63 

3.26 

4.89 

6.52 

8.15 

9.78 

2.38 

4.76 

7.14 

9.52 

11.90     14.28 

70.. 

.    2.31 

4.61 

6.92 

9.22 

11.53 

13.84 

3.64 

7.29 

10.93 

14.57 

18.21     21.86 

80.. 

.    3.21 

6.43 

9.64 

12.85 

16.07 

19.28 

5.51 

11.02 

16.54 

22.05 

27.56    33.07 

90.. 

.    4.43 

8.87 

13.30 

17.73 

22.17 

26.60 

8.28 

16.56 

24.84 

33.12 

41.40     49.68 

100. 

.    6.07 

12.15 

18.22 

24.29 

30.36 

36,44 

12.38 

24.75 

37.13 

49.50 

61.88     74.26 

Yearly  Yearly  Yearly 

*>   PERCENT  

Yearly  Yearly 

Yearly 

Yearly 

AM  0  U  NT   AT 

Yearly  Yearly 

6   PERCENT  

Yearly  Yearly  Yearly 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost 

cost      cost 

per 

per 

per 

per 

per 

per 

per 

per 

per 

per 

per        per 

acre,! 

acre,  2 

acre,  3 

acre,} 

acre,  5 

acre,  6 

acre,  1 

acre,  2 

acre,  3 

acre,} 

acre,  5  acre,  6 

YRS. 

cent. 

cents. 

cents. 

cents. 

cents. 

cents. 

cent. 

cents. 

cents. 

cents. 

cents,    cents. 

30.. 

.$0.66 

$1.33 

$1.99 

$2.66 

$3.32 

$3.99 

$0.79 

$1.58 

$2.37 

$3.16 

$3.95     $4.74 

40.. 

.   1.21 

2.42 

3.62 

4.83 

6.04 

7.25 

1.55 

3.10 

4.64 

6.19 

7.74       9.29 

50.. 

.   2.09 

4.19 

6.28 

8.37 

10.47 

12.56 

2.90 

5.81 

8.71 

11.61 

14.52     17.42 

60.. 

.   3.54 

7.07 

10.61 

14.14 

17.68 

21.22 

5.33 

10.66 

15.99 

21.33 

26.66     31.99 

70.. 

.   5.89 

11.77 

17.66 

23.54 

29.43 

35.31 

9.68 

19.36 

29.04 

38.72 

48.40     58.08 

80.. 

.   9.71 

19.42 

29.14 

38.85 

48.56 

'  58.27 

17.47 

34.93 

52.40 

69.87 

87.33  104.80 

90.. 

.15.95 

31.89 

47.84 

63.78 

79.73 

95.68 

31.41 

62.82 

94.23 

125.65 

157.06  188.47 

100. 

.26.10 

52.20 

78.30 

104.40 

130.50 

156.60 

56.39 

112.77 

169.16 

225.54 

281.93338.31 

18 


UNIYERSm  OF  OALJFOKNIA  LIBRARY 
THE  1AW 


THIS  BOOK  IS 

STAMPED  BELOW 


SF?    10 


OCT  21 


-.,?ERKELEY 


